Thailand Central Bank Holds Rate Steady, Raises Growth Forecasts — Update

By Amanda Lee

Thailand's central bank held rates for a fourth consecutive meeting Wednesday as relatively controlled inflation gives it space to maintain a pro-growth stance.

The Bank of Thailand's monetary policy committee voted unanimously to maintain the policy rate at 1.00%, as all 14 economists polled by The Wall Street Journal had expected. One member was unable to attend, the BOT said.

The central bank maintained a cautious tone, saying overall growth remains below potential despite gaining momentum from the artificial-intelligence boom. It projected a temporarily rise in inflation this year and said it would monitor growing risks associated with the Middle East conflict, oil prices and El Nino.

The BOT raised its 2026 growth forecast to 2.4% from the 2.3% projected in June. It also raised its 2027 growth forecast to 2.1% from 1.8%.

The central bank lowered its forecasts for average headline inflation to 2.1% from 2.8% for 2026 and to 1.3% from 1.4% for 2027.

The move comes ahead of the Federal Reserve's interest-rate decision, also widely expected to be a hold, as the continued oil shock stemming from the Middle East war keeps global central banks under pressure.

It's a classic monetary policy dilemma: raise rates to tamp inflation and risk stymieing growth, or look past the supply shock at the risk of falling behind the curve.

Capital Economics expects the central bank hold rates steady for the rest of the year and deliver one final 25-basis-point cut in 2027.

Pointing to the central bank's assessment that overall growth remains "below its potential," CE said the BOT's main concern is the weak economy.

"Thailand has been hit hard by the jump in global energy prices and has not benefited from the jump in AI-related exports to the extent of some other economies in Asia," it said, adding that recent data from the third quarter suggests that the economy has continued to struggle.

The BOT is one of the few central banks that has not tightened its policy settings during a year where others--including the Fed--have hiked. Earlier, New Zealand's central bank surprised markets by holding interest rates steady.

Where economies like the Philippines have opted to act aggressively to stop energy costs from spilling over into broader inflation, Thailand has had the advantage of entering the oil crisis with low inflation. Despite also importing the bulk of its fuel from the Middle East it has yet to feel a significant inflationary hit.

That has allowed Thai policy makers to keep an accommodative policy stance that can help aid what has been a slow and uneven recovery. Even with investment and exports performing well, growth remains below potential and consumption anemic.

Write to Amanda Lee at amanda.lee@wsj.com

(END) Dow Jones Newswires

October 28, 2026 04:48 ET (08:48 GMT)